$1,000 Option Trading Challenge (Week 1 Update + Current Setup)

[BenTen]

For those unfamiliar, I started a $1k Challenge in our Discord trading chatroom late last week (Jan. 2nd). The purpose of this challenge is to build a small account while learning about risk management, charting, and helping each other grow as a trader.

Currently, we have about 6 people competing in the challenge including myself. You can check out our spreadsheet here. Also, check out Steve's learning log as well. He has been doing a great job at logging and analyzing his trades.

This post will include some updates about what I traded since the challenge started up until today. And what I learned.

The following tickers were traded:

• AMZN
• SPY
• NFLX
• NVDA
• SPX
• AAPL
• TSLA
• GOOGL

As you can see, quite tech heavy.

I have to say since the challenge started, I have invested a lot of time into learning. This includes finding new indicators that will be beneficial to my trading style, reading about different chart setup, learning about MACD divergence, and more.

All are recommended to any traders, not just people who trade options.

How Much Did I Make This Week?

In a total of 8 trading days, I initiated 24 trades. All of which netted me $610. So for the first week, I'm up about $600.

Current Trading Setup

One of the biggest things I learned from doing this challenge is that less is more. Seriously! I often find myself digging through tons of websites to find indicators that will help me trade better. At one point I had about 10 indicators in one setup. This wasn't good at all.

I had to take a step back and evaluate my trading style and setup. I figured, let's stick to what works. And what ended up working for me was quite simple and straight to the point.

Indicators I'm using:

• Auto Trend Lines
• Hand-drawn Support / Resistance (1h, 4h, and daily). I also use shorter timeframe and pre-market data.
• MACD Divergence
• Gap Fill (it's an indicator that shows potential gap fill)
• RSI
• DMI
• Simple Moving Average (14 and 30)

I'm open to sharing my existing setup on ThinkorSwim. Just let me know and I can send it to you.

I'll be posting specific charts from some of the trades I took throughout the first week below. Stay tuned!

 

[Birdie]

very nice!

 

[BenTen]

Quick analysis of a trade on Jan. 10th. Bought 5 cons of $SPY when it was trying to get back to the support line I had drawn based on pre-market data. In addition, Macd_grip also confirmed bullish direction.

 

[BenTen]

I originally wanted to play calls on Netflix. Was waiting for it to break above 275.79 (but it failed). So I waited for the ticker to either break below support or some sort to play puts. Fortunately, the market started to trend down. NFLX broke below the trend line and the 9 EMA so I shorted there. I noticed that we have minor support later on so I took the 20%.

 

[BenTen]

Traded $AMZN on Jan. 2nd. Bought 2 contracts at 4.8. Got rid of one at 5.4 and the other one at 6.5. Here is the reason why. I got in after it broke the 1520 resistance point. Made some profit so I got rid of one contract. It shortly went under after but I did not sell because it was still above the 9 EMA (bullish). Supertrend showed a buy signal after that = another confirmation to help me hold the position. I sold the last contract at 10:09 PST. Ended the first day with +$228.

 

[MasterSteve]

@BenTen That is an absolute perfect setup nice catch! Referring to the SPY calls.

 

[BenTen]

@MasterSteve Thank you!

 

[HighBredCloud]

@BenTen So how did this work out? I agree with you on the indicators...The more you have the longer it takes you to make a decision...I do have a question tho...With the auto trend lines...did you ever find any delays with the new candles forming?

 

[BenTen]

@HighBredCloud Dang, it's been a while since we started this challenge. It was supposed to be a 2-week challenge. You can see the results for Week 2 here.

Regarding the auto trendline indicator, it's somewhat useful, but I manually draw my own trend lines now.

 

[HighBredCloud]

@HighBredCloud Dang, it's been a while since we started this challenge. It was supposed to be a 2-week challenge. You can see the results for Week 2 here.

Regarding the auto trendline indicator, it's somewhat useful, but I manually draw my own trend lines now.

@BenTen Yeah I just happen to stumble upon it while searching for auto trend lines...Nice Job...I haven't explored the whole forum yet but does anyone here every talk about weekly swing picks etc? Just imagine if we all bought or sold the same stock at the same time...LOL...

 

[horserider]

@HighBredCloud IF we all bought or sold at the same time guess at least we all gain or lose at the same time. Nothing else.

 

[HighBredCloud]

@HighBredCloud IF we all bought or sold at the same time guess at least we all gain or lose at the same time. Nothing else.

@horserider you don't think we could make the markets work in our favor if we all bought or shorted at the same time? I guess its hard to compete with the tens of thousands of shares purchased by the institutions that move the markets daily.

 

[horserider]

No

If you wanted to play in low float penny or OTC stocks, maybe but everyone better be quick to sell or some may be caught holding the bag.

 

[wen]

@BenTen can u share your setup? Thanks!

 

[BenTen]

@wen I'm no longer using that setup, but if you're interested, you can add all the indicators I mentioned in that post into your chart and it should equate to something similar.

 

[ojasgandhi70]

Hi Ben,

Will you be able to share trend indicator label study with me?
Thanks,
Ojas

 

[BenTen]

@ojasgandhi70 It's been awhile since I use that chart. I don't recall what it was

 

[ojasgandhi70]

Will you be able to share your latest setup if you don't mind.
Thanks,
Ojas

 

[BenTen]

@ojasgandhi70 My setup is much simpler now. I use the AMM 2.0 and Market Sentiment indicators along with support and resistance areas that I draw manually.

 

[ojasgandhi70]

I also draw support and resistance manually. What's AMM 2.0? what market sentiment indicators do you use?